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The Census Bureau tracks a variety of data regarding homeownership, one of which shows that there are just under 115 million households in the United States and slightly fewer than 75 million of those households owned the home that they live in during the last quarter of 2013. That yields a homeownership rate of 65.2%, which is a rate that has been roughly stable for the last two years.

Home Ownership peaks and valleys since 1965

According to economists affiliated with the National Association of Realtors®, this particular Census Bureau data source has been published quarterly since 1965. As shown in the graph above, from the beginning of the series in 1965 through 1980 the homeownership rate was on a slow and steady rise from a low of 62.9%. In 1980 it peaked at 65.8% before falling back to 63.5% in 1985. From its 1985 low through 1995 the homeownership rate remained in a roughly narrow range of 63.5% to 64.5%. In 1995, the homeownership rate began a steady ascent that peaked at 69.2% in 2004. Since that time, the rate fell, but at slightly higher than 65%, it remains higher than the valley of 1985 to 1995.

The critical question is where is the homeownership rate going? The trend varies by region, with the Midwest and South going up, the Northeast bouncing about and the West in a continuing decline. The trend also varies by age group, which does not bode well for the overall rate since younger age groups are not becoming homeowners. This is, of course, good news for investors since these younger folks need to live somewhere and are most likely to rent if they do not buy (or, they will live with their parents for longer periods, not forming new households at all).

Homeownership rate graph by age group

– MarketWatch.com image

Young adults play an outsized role in the housing market because they most likely buy entry-level homes that allow other homeowners to move-up to larger, more expensive homes. If young adults don’t buy, all segments of housing (except the rental market) suffer. Only time will tell whether homeownership can break out of the slump in an environment with rising interest rates and stagnant incomes.

Source Articles:

U.S. Homeownership Rate — Economists’ Blog from the National Association of Realtors®

Homeownship Rate for Young Adults Drops Further — MarketWatch.com

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